1) Which of the following is not a required disclosure about each major class of capital assets?

A. Beginning-of-year and end-of-year balances showing accumulated depreciation separate from historical cost.

B. Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.

C. Depreciation expense for the current period with disclosure of the amounts charged to each function in the statement of activities.

D. Disclosures describing works of art or historical treasures that are not capitalized and explaining why they are not capitalized.

2) The City of Oak Park constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements?

A. $900,000.

B. $925,000.

C. $875,000.

D. $0.

3) Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except:

     A. A debit to Cash for $15,000.

     B. A debit to Accumulated Depreciation for $30,000.

     C. A credit to Equipment for $40,000.

     D. A credit to Other Financing Sources for $5,000.

4) GASB standards require that general capital assets be recorded in the government-wide statements at:

A. Historical cost.

B. Fair value at the financial statement date.

C. Estimated cost at the financial statement date.

D. None of the options are correct.

5) Which of the following is not true for capital projects funds?

A. Capital projects funds use a Construction Work in Progress account to record costs until the project is completed.

B. Encumbrance accounting is generally used.

C. Capital projects funds use the modified accrual basis of accounting.

D. Capital projects funds have a project-life focus.

6) The liability for general obligation bonds should be recorded in the:

A. General Fund.

B. Capital projects fund.

C. Governmental activities journal.

D. Debt service fund.

7) Which of the following debt service funds would normally have the largest balance in its Fund Balance account?

A. Serial bond debt service fund.

B. Deferred serial bond debt service fund.

C. Irregular serial bond debt service fund.

D. Term bond debt service fund.

8) Which of the following is a true statement regarding in-substance defeasance of bonds?

A. The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.

B. The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.

C. The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.

D. The government must agree to maintain sufficient unrestricted cash and investments in its governmental funds to cover all interest and principal payments for the debt being defeased.

May 13, 1988 a Friday that will be remembered by a major Chicago bank. Embezzlers nearly escaped with $69 million! Arnand Moore, who was released after serving four years of his 11 year sentence for a $180,000 fraud decided it was time to put his fingers in something a little bigger and better. He instigated a $68.7 million fraud plan. Naming himself as "Chairman," he assembled Herschel Bailey, Otis Wilson, Neal Jackson, Leonard Strickland, and Ronald Carson to complete the formation of his "Board". Most importantly, the "Board" was able to convince an employee of the Chicago bank to provide their "in". The caper required one month of planning in a small hotel in Chicago and took all 64 minutes to complete. The employee had worked for the Chicago bank for eight years and he was employed in the bank's wire transfer section, which dispatches multimillion-dollar sums around the world via computers and phone lines. Some of the bank's largest customers send funds from their accounts directly to creditors and suppliers. For electronic transfers,most banks require that a bank employee call back another executive at the customer's offices to reconfirm the order, using various code numbers. All such calls are automatically taped. The crooked employee participated in these deposits and confirmations, and he had access to all the code numbers and names of appropriate executives with whom to communicate. The "Board's" targets were Merrill Lynch, United Airlines, and Brown_Forman Distillers. A few members of the gang set up phony bank accounts in Vienna under the false names of "Lord Investments," "Walter Newman," and "GTL Industries." at 8:30 a.m. a gang member posing as a Merrill Lynch executive called the bank to arrange a transfer of $24 million to the account of "Lord Of Investments,", and was assisted by one of the crooked employees unsuspecting co-workers. In accordance with the bank's practice of confirming the transfers with a second executive of the company, the employee stepped in and called another supposed "Merrill Lynch" executive who was actually Bailey, his partner in crime. Bailey's unfaltering, convincing voice was recorded automatically on the tape machine, and the crooked employee wired the funds to Vienna via the New York City bank. The same procedure followed at 9:02 and 9:34 a.m. with phony calls on behalf of United Airlines and Brown-Forman. The funds were initially sent to Citibank and Chase Manhattan Bank, respectively. On Monday, May 16, the plot was uncovered. the "Chairman and his "Board" were discovered by neither effort on the part of the Chicago bank nor any investigative authority. Although bank leaders do not like to admit just how close the culprits came to "getting away with it," investigators were amazed at how far the scheme proceeded before being exposed. Had the men been a little less greedy, say possibly $40 million, or if they had chosen accounts that were a little less active, they may have been touring the world to this day! The plot was discovered because the transfers overdrew the balances in two of the accounts, and when the companies were contacted to explain the NSF transactions, they knew nothing about the transfers.

1. How could this fraud have been prevented? Why is this a difficult fraud to prevent?

Management accounting measures, analyzes, and reports financial and nonfinancial information to internal managers. The goal is to use past performance to predict the future. The internal reports should plainly inform managers of the financial results of actual operations. The reports should also show how activities can be changed to affect and improve what will happen in the future. Business operations are complex sets of activities, and to maximize profit considerable information, analysis, and decision making is required in advance of actual action. Decisions are needed when there are real alternatives that managers can choose from to deal with operating problems. Without high-quality information, business could not be conducted. David Diamond is the owner of the Galaxy chain of four-star prestige hotels. These hotels are in Chicago, London, Los Angeles, Montreal, New York, Seattle, Tokyo, and Vancouver. Diamond is currently struggling to set weekend rates for the Vancouver hotel (the Vancouver Galaxy). From Sunday through Thursday, the Galaxy has an average occupancy rate of 90%. On Friday and Saturday nights, however, average occupancy declines to less than 30%. Galaxy’s major customers are business travellers who stay mainly Sunday through Thursday. The current room rate at the Galaxy is $180 a night for single occupancy and $216 a night for double occupancy. These rates apply seven nights a week. For many years, Diamond has resisted having rates for Friday and Saturday nights that are different from those for the remainder of the week. Diamond has long believed that price reductions convey a “nonprestige” impression to his guests. The Vancouver Galaxy highly values its reputation for treating its guests as “royalty.” Most room costs at the Galaxy are fixed on a short-stay (per-night) basis. Diamond estimates the variable costs of servicing each room to be $24 a night per single occupancy and $26.40 a night per double occupancy. Many prestige hotels in Vancouver offer special weekend rate reductions (Friday and/or Saturday) of up to 50% of their Sunday-through-Thursday rates. These weekend rates also include additional items such as a breakfast for two, a bottle of champagne, and discounted theatre tickets. Forecasting outcomes is the heart of a decision. There will almost always be a gap between what was expected and what is actually realized because the future cannot be predicted with accuracy. A good decision process includes a post-implementation assessment and explanation of the key causes of differences between expected and actual outcomes. This is how managers learn from their experiences.

Required: Write a report from the standpoint of Dimond and include all the following concerns:

a. Would you recommend that Diamond reduce room rates at the Vancouver Galaxy on Friday and Saturday nights? What factors to protect the value proposition should be considered in his decision?

b. In six months’ time, the Grey Cup is to be held in Vancouver. Diamond observes that several four-star prestige hotels have already advertised a Friday-throughSunday rate for Grey Cup weekend of $360 a night. Should Diamond charge extra for the Grey Cup weekend? Explain.

PLEASE SHOW THE REQUIRED CALCULATIONS WHICH ARE USED IN MANAGERIAL ACCOUNTING.

Individual case study

Management accounting measures analyzes and reports financial and nonfinancial information to internal managers. The goal is to use past performance to predict the future. The internal reports should plainly inform managers of the financial results of actual operations. The reports should also show how activities can be changed to affect and improve what will happen in the future. Business operations are complex sets of activities, and to maximize profit considerable information, analysis, and decision making is required in advance of actual action. Decisions are needed when there are real alternatives that managers can choose from to deal with operating problems. Without high-quality information, business could not be conducted. David Diamond is the owner of the Galaxy chain of four-star prestige hotels. These hotels are in Chicago, London, Los Angeles, Montreal, New York, Seattle, Tokyo, and Vancouver. Diamond is currently struggling to set weekend rates for the Vancouver hotel (the Vancouver Galaxy). From Sunday through Thursday, the Galaxy has an average occupancy rate of 90%. On Friday and Saturday nights, however, average occupancy declines to less than 30%. Galaxy’s major customers are business travellers who stay mainly Sunday through Thursday. The current room rate at the Galaxy is $180 a night for single occupancy and $216 a night for double occupancy. These rates apply seven nights a week. For many years, Diamond has resisted having rates for Friday and Saturday nights that are different from those for the remainder of the week. Diamond has long believed that price reductions convey a “nonprestige” impression to his guests. The Vancouver Galaxy highly values its reputation for treating its guests as “royalty.” Most room costs at the Galaxy are fixed on a short-stay (per-night) basis. Diamond estimates the variable costs of servicing each room to be $24 a night per single occupancy and $26.40 a night per double occupancy. Many prestigious hotels in Vancouver offer special weekend rate reductions (Friday and/or Saturday) of up to 50% of their Sunday-through-Thursday rates. These weekend rates also include additional items such as breakfast for two, a bottle of champagne, and discounted theatre tickets.

Forecasting outcomes is the heart of a decision. There will almost always be a gap between what was expected and what is actually realized because the future cannot be predicted with accuracy. A good decision process includes a post-implementation assessment and explanation of the key causes of differences between expected and actual outcomes. This is how managers learn from their experiences.

required

Write a report from the standpoint of Dimond and include all the following concerns:

a. Would you recommend that Diamond reduce room rates at the Vancouver Galaxy on Friday and Saturday nights? What factors to protect the value proposition should be considered in his decision?

b. In six months’ time, the Grey Cup is to be held in Vancouver. Diamond observes that several four-star prestige hotels have already advertised a Friday-through Sunday rate for Grey Cup weekend of $360 a night. Should Diamond charge extra for the Grey Cup weekend? Explain.

Ronald Smith owns a home at 7890 Brookfield Lane, Chicago, Illinois. The garage in the back of,

the house is beginning to fall down so he decides to build a modern two-car garage in its place.

He calls Garages R Us for a free estimate on a new garage. Sam "the Salesman" Jones comes out

and shows Mr. Smith the various styles of buildings and the costs involved. In addition to the

pictures, Mr. Jones tells Mr. Smith that once they tear down the old garage, they put a 1/4" layer

of gravel down. They then lay 10 steel rods widthwise and 4 steel rods lengthwise on top of the

gravel. Only when that is done do they start pouring the concrete. The extra gravel and rods

(which are not done by every company) are designed to give additional strength to the floor so

that there will never be a problem with it being able to hold 2 automobiles at one time. Sam

shows him some diagrams of what he is talking about.

Ronald is impressed and chooses the garage he likes best. Sam then asks how he intends to pay

for the work. When Ronald tells him that he was going to go to a bank to get a loan, Sam tells

him about the financing options they have through Garages R Us. Ronald likes the terms and

signs a contract for the building of the garage (which does not contain any information about the

gravel or the rods and does not contain any pictures as he had been shown) subject to approval of

the financing.

After the financing is approved, Garages R Us assigns their rights to payment from Ronald to the

Bedford Park Savings and Loan Association. Notice is sent to Ronald of the assignment.

The workmen tear down the original garage and start to construct the new one. Ronald, who is

retired, watches out of his back window every day as they work: As they begin to lay down the

gravel and rods, he notices that they are not doing what he had been told they would do. They

have scattered some gravel across the ground, but in no way is it 1/4" thick. They have spread

some rods across the ground, but there are 4 across widthwise and 2 across lengthwise.

Ronald immediately rails Sam and begins to complain. Before Sam can get out to the house to

talk to Ronald, the workers poured the concrete and it set. Ronald wants the concrete broken up

so that he can show Sam what is underneath. Sam tells him that if they do that, Ronald will be

responsible for the cost of laying down new concrete. They get into a shouting match, Ronald

tells the workers to stop work and Sam leaves.

After one month goes by, the Bank calls Ronald to find out where the first month payment is.

Ronald tells the Bank that he is not going to pay for work that wasn't completed and wasn't done

right to begin with. The Bank and wants to sue Ronald. Ronald wants to sue Garages R Us.

In your opinion do any of them have a good cause of action to sue anyone. If sued, does anyone

have any defenses? In addition to the elements of a contract, you may wish to discuss breach,

material breach, assignment, preventing performance, parole evidence and misrepresentation.

Case Study #2

Background:
Nicky’s Carpet Cleaning Company

You run Nicky’s Carpet Cleaning Company which cleans carpets for commercial businesses. On average one carpet cleaner can clean six offices in a seven hour shift, Monday through Friday. You have 100 cleaners currently working for you, and they work 250 days per year. A recent analysis of the rework that must be done finds that, on average, one in every 6 carpets cleaned is not up to your standards. Because of Nicky’s “Satisfaction Guarantee” when a carpet does not meet the standards it is redone immediately at no extra cost to the customer.

The profit on cleaning each office is $25. You pay your cleaners $15 per hour. ($105 per day) When you have to re-clean a carpet you lose $20 in employee time.

Your training manager has done a needs assessment regarding this issue at your request and has identified the cause as being a lack of KSA’s. The training manager proposes a training program that he estimates will reduce the re-cleaning by 50%. The training would take 4 hours and they could train 25 employees per session. Training could therefore be completed for all 100 employees over two Saturdays, by running two four hour sessions on each Saturday.

Costs Associated With Training

Postage to mail out pre-training materials to all employees $300

20 days of training manager’s time for creation $3,200 of training program

Training Facilitator Costs ($325 per day) $650

Training Facility Rental
AV Equipment Rental for 2 Days ($1000 per day) $2,000 Refreshments for employees $600

Employee Wages (Nicky decides to conduct training on a $8000 Saturday and pay his employees an extra $5 per hour as
overtime) $20 per hour per employee

Cost of Facilitators Hotel Room/Expenses $600

Clerical Support to assist training manager in creating
Program- (20 hrs @ $10 per hr.) $200

External Consultant Fees associated with reviewing
Training Program created by training manager $800

Photocopying costs to produce brochure for all employees
with training information sent out prior to training. $200

Administrative support to prepare attendee lists/schedules $120 for training dates ( 10 hrs. @ $12 per hour)

Cost to purchase new LCD projector for training
department to share as old one no longer works $2000

$1000

Case Study Questions

1. In reviewing the related costs associated with the training program please identify which ones falls into the following categories:

   Development Costs, Direct Costs, Indirect Costs, Trainee Compensation, Overhead Costs

2. How much do the re-cleanings cost Nicky each year? Show all mathematical calculations.

3. After the training is complete, what is the estimated annual cost savings each year? Show all mathematical calculations.

4. What is the total cost of conducting the training?

5. If training was cancelled the day before, what would the training costs then be? (assume no cancellation fees would apply) Please list items, show related costs and provide a final total.

Individual Case Analysis(35%)

Management accounting measures analyzes and reports financial and nonfinancial information to internal managers. The goal is to use past performance to predict the future. The internal reports should plainly inform managers of the financial results of actual operations. The reports should also show how activities can be changed to affect and improve what will happen in the future. Business operations are complex sets of activities, and to maximize profit considerable information, analysis, and decision making is required in advance of actual action. Decisions are needed when there are real alternatives that managers can choose from to deal with operating problems. Without high-quality information, business could not be conducted. David Diamond is the owner of the Galaxy chain of four-star prestige hotels. These hotels are in Chicago, London, Los Angeles, Montreal, New York, Seattle, Tokyo, and Vancouver. Diamond is currently struggling to set weekend rates for the Vancouver hotel (the Vancouver Galaxy). From Sunday through Thursday, the Galaxy has an average occupancy rate of 90%. On Friday and Saturday nights, however, average occupancy declines to less than 30%. Galaxy’s major customers are business travellers who stay mainly Sunday through Thursday. The current room rate at the Galaxy is $180 a night for single occupancy and $216 a night for double occupancy. These rates apply seven nights a week. For many years, Diamond has resisted having rates for Friday and Saturday nights that are different from those for the remainder of the week. Diamond has long believed that price reductions convey a “nonprestige” impression to his guests. The Vancouver Galaxy highly values its reputation for treating its guests as “royalty.” Most room costs at the Galaxy are fixed on a short-stay (per-night) basis. Diamond estimates the variable costs of servicing each room to be $24 a night per single occupancy and $26.40 a night per double occupancy. Many prestigious hotels in Vancouver offer special weekend rate reductions (Friday and/or Saturday) of up to 50% of their Sunday-through-Thursday rates. These weekend rates also include additional items such as breakfast for two, a bottle of champagne, and discounted theatre tickets. Forecasting outcomes are the heart of a decision. There will almost always be a gap between what was expected and what is actually realized because the future cannot be predicted with accuracy. A good decision process includes a post-implementation assessment and explanation of the key causes of differences between expected and actual outcomes. This is how managers learn from their experiences

Required:

Write a report from the standpoint of Dimond and include all the following concerns:

a. Would you recommend that Diamond reduce room rates at the Vancouver Galaxy on Friday and Saturday nights? What factors to protect the value proposition should be considered in his decision?

b. In six months’ time, the Grey Cup is to be held in Vancouver. Diamond observes that several four-star prestige hotels have already advertised a Friday-through Sunday rate for Grey Cup weekend of $360 a night. Should Diamond charge extra for the Grey Cup weekend? Explain.

Required Reading:

Ward, M, and Chrysanthos, N 2020, ‘’Higher than usual demand’ for toilet paper in NSW supermarkets’, Sydney Morning Herald, 26 June.

'Higher than usual demand' for toilet paper in NSW supermarkets

Premier Gladys Berejiklian has asked shoppers to remain calm after reports of bare toilet paper shelves in NSW following the reinstatement of product limits in Victorian supermarkets.

Toilet paper was in short supply at Coles and Woolworths at Roselands in Sydney's south-west on Thursday, the Herald has been told.

Posting on social media, shoppers also complained of empty shelves at Coles Merrylands and Woolworths Leichhardt in Sydney, as well as Coles Toronto in Lake Macquarie.

On Wednesday afternoon Coles, Woolworths and IGA said they would reinstate product limits for toilet paper, hand sanitiser, paper towels, flour, sugar, pasta, minced meat, long-life milk, eggs and rice at all their Victorian stores.

Coles, on Friday, reintroduced one-pack purchase limits for toilet paper and paper towels across all of its stores, including Coles online.

"We ask that customers continue to shop normally so that everyone can have access to the food and groceries they need," a spokesperson said.

Costco, which has stores at Marsden Park, Crossroads and Auburn, has also reintroduced a one-per-person limit on its toilet paper packs nationwide.

It is believed the panic buying, which was witnessed earlier in the pandemic, is being caused by an uptick in coronavirus cases in Melbourne over the past week.

Victoria reported its ninth day of double-digit case growth on Thursday, with 33 new cases.

NSW Premier Gladys Berejiklian said on Friday that shoppers need to "stay calm" as there was no need for items to be stockpiled.

"Please continue to maintain your calm; continue to do what you've been doing – NSW is doing incredibly well," Ms Berejiklian said, adding that she didn't "blame" people for being concerned as product limits were reintroduced in Victoria amid an uptick in cases.

"We all have to be on our guard, but we certainly, certainly don't need to change our normal buying habits. So please continue with your normal buying habits, there's nothing to worry about."

A Woolworths spokesperson said they had seen "higher than usual" demand for toilet paper in parts of NSW, and were monitoring the situation.

“We’ve seen pockets of higher-than-usual demand for toilet roll across parts of NSW [on Thursday], but not anywhere near the levels we saw in Victoria," the spokesperson said.

"We’ll keep a close eye on demand over the coming days. We continue to ask customers to buy only what they need, as there is plenty of stock to replenish our shelves.”

Question :

1. Evaluate the outcomes in the market for toilet paper in terms of Pareto efficiency, fairness, and the effect on the consumer surplus, producer surplus, and deadweight loss if:

(a) no restrictions are imposed by supermarkets.

(b) purchase-limit restrictions are imposed by supermarkets.

Include appropriate diagrams to illustrate your answers.

2. Suggest and explain two other ways the problem in this market could be solved. Evaluate these alternative solutions in terms of Pareto efficiency and fairness.

3. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

a. Phil won $840 in the scratch-off state lottery. There is no state income tax.

Amount to be included?

4. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

b. Ted won a compact car worth $25,200 in a TV game show. Ted plans to sell the car next year.

Amount to be included?

5. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

c. Al Bore won the Nobel Peace Prize of $795,000 this year. Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization.

Amount to be included?

6. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

d. Jerry was awarded $4,250 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year.

Amount to babe included?

7. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

e. Ellen won a $1,370 cash prize in a school essay contest. The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education.

Amount to be included?

8. For each of the following independent situations, indicate the amount the taxpayer must include in gross income: (Leave no answer blank. Enter zero if applicable.)

f. Gene won $325 in the office March Madness pool.

Amount to be included?

9. For each of the following situations, indicate how much the taxpayer is required to include in gross income: (Leave no answer blank. Enter zero if applicable.)

a. Steve was awarded a $8,850 scholarship to attend State Law School. The scholarship pays Steve's tuition and fees.

Amount to be included?

10. For each of the following situations, indicate how much the taxpayer is required to include in gross income: (Leave no answer blank. Enter zero if applicable.)

b. Hal was awarded a $14,500 scholarship to attend State Hotel School. All scholarship students must work 25 hours per week at the School residency during the term.

Amount to be included?

11. Irene is disabled and receives payments from a number of sources. The interest payments are from bonds that Irene purchased over past years and a disability insurance policy that Irene purchased herself.

Calculate Irene’s gross income.

Gross income?

Question 3

Amritha Singh is a middle manager with Coaster Plus Ltd (Coasters), a company that designs and manufactures roller coasters for amusement parks across North America. She has been appointed one of the project managers for the design and delivery of a special roller coaster for the Ultimate Park Ltd, an American customer. A major component of the project is the steel tracking, and one possible source is Trackers Canada Ltd (Trackers). Amritha’s supervisor has asked her to negotiate the necessary contract. Amritha began negotiations with Jason Hughes. Jason is a representative of Trackers, the steel tracking manufacturer willing to supply tracking to Coasters, Amritha’s employer. Amritha provided Jason with the plans and specifications for the roller coaster, and they negotiated a number of points, including price, delivery dates, and tracking quality. A short time later, Jason offered to sell Coasters a total of 900 metres of track in accordance with the plans and specifications provided. Jason’s offer contained, among other matter, the purchase price ($1.5 million), delivery date, terms of payment, insurance obligations concerning the track, and a series of warranties related to the quality and performance of the tracking to be supplied. There was also a clause, inserted at Amritha’s express request, which required Trackers to pay $5000 to Coasters for every day it was late in delivering the tracking.

After renewing the offer several days, Amritha for several days, Amritha contacted Jason and said, “You drive a hard bargain, and there are aspects of your offer that I’m not entirely happy with. However, I accept your offer on behalf of my company. I’m looking forward to doing business with you.”

Within a month, Trackers faced a 20% increase in manufacturing costs owing to an unexpected shortage in steel. Jason contacted Amritha to explain this development and worried aloud that without an agreement from Coasters to pay 20% more for the tracking, Trackers would be unable to make its delivery date. Amritha received instructions from her supervisor to agree to the increased purchase price in order to ensure timely delivery. Amritha communicated this news to Jason, who thanked her profusely for being so cooperative and understanding.

Jason kept his word and the tracking was delivered on time. However, Coasters has now determined that its profit margin on the American deal is lower than expected, and it is looking for ways to cut costs Amritha is told by her boss to let Jason know that Coasters will not be paying the 20% price increase and will remit payment only in the amount set out in the contract. Jason and Trackers are stunned by this development.

Applying the relevant principle(s) of contract law discuss the following questions:

a) Whether the negotiations between Jason and Amritha have legal consequences. (3 marks)

b) Discuss specific applicable ways by which each party mentioned above could have avoided the contract and as well as the implications of each way identified. (4 marks)

c) Discuss the consequences of the instruction of Amritha’s boss to the effect that Coasters will not be paying the 20% price increase and will remit payment only in the amount set out in the contract. (4 marks)